YEAR 2007 WAS HARD FOR CONSUMERS

KANWAL SALEEM
Jan 07 - 13, 2008

LAHORE: The year 2007 was very hard for the consumers as they paid higher prices for wheat flour, rice, some pulses, ghee and cooking oil, fresh and tetra milk, beef, poultry and some vegetables.

Shortage of wheat flour and its high prices not only put extra financial burden on the consumers but it also forced the government to import wheat to avoid any difficult situation.

The government is paying Rs 13 billion per month as subsidy to keep the oil prices on hold. Global oil prices have increased to unprecedented level from $20 to $100 per barrel within a few years. Had the government did not provide subsidy on oil, the consumers would have faced more serious financial burden, analysts told PAGE.

According to them, food prices in Pakistan are increasing at a lower rate of 10 to 11 percent as compared to global increase rate of 20 to 25 percent per annum. Ultimately food prices in Pakistan will come in line with world food prices.

They said wheat is available in the country at Rs 18 per kg while world price of wheat is Rs 30 kg. A 35 percent regulatory duty has been imposed on wheat product to check its exports, they added. Ultimately the prices of wheat, corn and cotton would move too towards international prices. It will give a big jump to rural economy. Strategy was being devised to provide subsidy to lower income group, they added.

A comparison of prices between January 1, 2007 and January 1, 2008, although showed minor decline in prices of a few items, but there was increase in majority of essential items which definitely made an impact on consumers' budgets.

A vast section of population suffered heavily due to food inflation, as their salaries were not raised. However, those working with multinational companies or corporate sector might not have felt the pinch of higher prices. Although, the government had provided subsidy on oil and wheat but it miserably failed in protecting consumers' interests through stringent measure to curb rise in food prices.

At the advent of holy month of Ramazan, people raised many hue and cries in the Punjab due to sudden surge in prices of daily use items. The government did nothing and except shifting the responsibility on District Governments. When the Ramazan was near to end, some measures were taken without any benefit of the consumers. Same situation emerged when wheat flour crisis erupted. The then Punjab government blamed the then central government for not putting in place proper checks and balances in checking wheat smuggling, while the then Industries Minister also raised some questions on poor handling of the matter.

Nevertheless, people were left at the mercy of market forces who in the absence of any effective price checking mechanism on the part of federal and provincial governments fully utilized the situation by charging higher prices. Even hoarding of various items increased in the year 2007, especially in wheat, ghee and atta.

According to Mr. Younas, a trader of Akbari Mandi, the government gave secondary importance to the rising wheat crisis. First, it allowed wheat exports despite the fact that crop was being harvested and no actual wheat crop size was determined. The government was sure to have a big crop, but later the wheat crop size remained short of expectations. In the meantime, exporters had shipped over 500,000 tons of wheat to various destinations, leaving the countrymen for bracing a possible wheat crisis, he added.

He was of the view every year consumers have been witnessing an increase in prices of essential items. He linked the rising prices of food items to non-serious attitude of the government in raising the local production of various crops. Therefore, dependence on the import had been rising. The prices of various items in international markets have been rising, therefore, consumers will have to bear the burden on paying more on imported items, he added.

He said domestic rice prices showed a record increase in the year 2007. The private sector made bulk shipment of quality rice to various countries after getting fair prices, thus leaving the consumers to rely on low quality rice at higher prices.

The retailers fully cashed in on the situation mixing the low quality with some high quality and charged substantial rate, he added.

In the year 2007, rising palm oil prices in Malaysia and Indonesia provided severe shock to consumers in the shape of rising prices of branded ghee and cooking oil, the market sources said. They added that poultry prices also remained on the higher side in the year 2007. The increase in poultry prices was due to rising cost of production following increase in feed rate to Rs975 per 50-kg bag from Rs735.

They said mutton and beef prices also surged as meat sellers linked the increase to rising smuggling of live animals and their meat to neighboring countries. On the milk sector, the government did not check frequent increase in both fresh and tetra milk rates.

It was due to this background that the Pakistan Muslim League-Nawaz had to announce that it would take immediate steps to halt prices of daily use items if voted to power.

According to former Finance Minister and the PML-N leader Senator Ishaq Dar, if voted to power, PML-N would take steps to freeze the prices of daily use items, fix minimum wage of laborers as Rs 6000, help increase purchasing power of people and promote the SMEs.

He said during PML-N last tenure, flour was being sold at Rs 6 per kg while stringent control was in place to maintain prices of daily use items.

He said his party would evolve a comprehensive package of pro-poor policies, institutions and programmes to reduce poverty. Housing schemes for low-income families in urban areas would be introduced while prices of food items will be maintained at reasonable level.

About employment opportunities, Dar said a major aim of socio-economic policies would be to expand employment opportunities to reduce poverty and ensure fuller utilization of human resources for productive purpose. New employment opportunities will be provided to over three million persons. A National Employment Fund will be created to assist qualified and skilled youth.

Dar further said that the PML-N would turn agriculture into a fully viable economic industry by focusing on small farmers, revitalizing the cooperative movement, reforming the agricultural credit system and moving rapidly towards national self-sufficiency in oil seeds. It will build consensus on the basis of 1991 water accord on distribution of Indus System to allow new water projects to be undertaken and extension of irrigation facilities to more areas. It will initiate crops insurance scheme.

Moreover, planned industrial development along with sustained progress in agriculture will be two important pillars of economic policy. In addition to existing tax holiday facilities, a complete tax holiday for three years will be allowed to all new industries after they go into production. Industrial estates with all facilities will be developed in backward areas and along the motorways.